The Ministry of Finance ("MOF") has recently issued the Guide to the Procurement Administration for Projects Funded by Loans and Donations from International Financial Institutions and Foreign Governments (the "Guide") and the Guide to Selecting and Engaging Procurement Agencies for Projects Funded by Loans and Donations from International Financial Organizations and Foreign Governments, both immediately effective from the issue date.
The Guide expressly states that a project's procurement activities that are wholly or partially funded by the loan or donations from an international financial institution or a foreign government shall comply with the legal instrument reached between the lender or the donor and the Chinese party. According to the Guide, the mode of loan or donation based procurement means the tendering process or any other styles of purchase adopted to determine the suppliers of goods, projects and services, in accordance with the legal instrument for the loan or donation. Generally, procedures for loan or donation funded procurement include three steps, i.e. the preparatory work at the initial stage, the organization of procurement activities, and the signing and execution of contracts. Furthermore, the Guide prescribes that after the construction of a project finishes or the required goods or services have been bought, the project implementation entity shall conduct acceptance inspections, make the final settlement of financial costs, and effectively work on handing over and registering relevant assets and liabilities, pursuant to stipulations agreed in the contract and China's applicable legal provisions.